Cheap natural gas, caution curb nuclear energy

Ernie Garrison rakes his son's front yard across from the Three Mile Island nuclear power plant, where the U.S. suffered its most serious commercial nuclear accident in 1979.

Ernie Garrison rakes his son's front yard across from the Three Mile Island nuclear power plant, where the U.S. suffered its most serious commercial nuclear accident in 1979. (JONATHAN ERNST, Reuters Photo)

Matt Assad, Of The Morning Call

It's radioactive, its plants can be expensive to build and it scares the bejeebers out of many, but to some, nuclear energy is the future.

That may well be true, but for now, the race to that future has slowed to a cautious crawl as regulators have become increasingly guarded since the accident last year at the Fukushima Daiichi nuclear plant in Japan, while the emergence of cheap natural gas is preventing investors from pumping billions of dollars into new reactor projects.

While European countries have a reputation for being more accepting of nuclear energy, and China is building reactors faster than anyone, the United States actually has the largest fleet of nuclear reactors, at 104. U.S. electricity produced by nuclear plants has increased from 5 percent in 1973 to 20 percent today.

Advocates pushing to reduce carbon emissions thought the percentage would continue to climb, but now they're wondering if nuclear energy can even hold its current share of the U.S. energy pie.

"The push for new reactors has slowed for sure," said Paul Elsberg, spokesman for Exelon, the nation's largest nuclear energy company, with 17 reactors nationwide, including three in Pennsylvania. "We certainly have no intentions to build any new plants. The investment is hard to justify right now."

The benefits of nuclear energy are undeniable. Though reactors are expensive to build, they're relatively cheap to run, they give off almost no harmful emissions, and a single reactor can typically create enough electricity to power more than 1 million homes.

Though the spent fuel rods used to power the plants remain dangerously radioactive for thousands of years, the rods that have to be disposed of annually from a typical plant amount only to a block the size of a minivan. And they're almost always disposed of on the plant site, eliminating any need to transport them.

Still, there's no glut of new applications to build reactors. A small part of that can be blamed on the fear created by nuclear accidents at Three Mile Island — now owned by Exelon — Chernobyl and last year at Fukushima. Each accident has brought a raft of new regulations that have caused industrywide changes.

After an earthquake followed by a tsunami doused power at Fukushima in March 2011, three reactors went into meltdown, forcing the evacuation of people within a 12-mile radius and projections that the radiation release could bring additional cancer deaths in residents for years to come.

The U.S. Nuclear Regulatory Commission has studied the meltdown and made more than 100 recommendations designed to help nuclear plants be better prepared for earthquakes, flooding and unexpected, lengthy power outages. The new rules would require U.S. plants to provide better venting systems and more reliable backup power systems.

PPL Corp. Chief Executive Officer William Spence, in February, said the added expense of the new regulations could force single-reactor owners to sell them to companies with multiple reactors.

And much like the accidents in 1979 at Three Mile Island and 1986 in Chernobyl, Fukushima has brought new fears about safety, making communities less welcoming to new reactor proposals. In the aftermath, Germany, which has seven operating plants, announced it was suspending its nuclear energy program.

"There is a great fear of accidents and real issues of how to dispose of nuclear waste," said Dr. Javad Tavakoli, an energy expert and professor of chemical engineering at Lafayette College in Easton. "As long as other energies such as wind, solar and biofuels are being promoted, I don't see a fast rise for nuclear."

But fears and new regulations are nothing new for the nuclear energy industry. Its biggest hurdle now is market forces that make it difficult to compete. The biggest of those is a runaway trend toward natural gas, which is plentiful, in demand and shockingly cheap.

Because gas is so plentiful, and energy consumption is in decline since the Great Recession, the wholesale natural gas price was at $3.35 per thousand cubic feet during the last rating period in November.

That's less than a third of the price at the same period in 2005, and there's no indication the natural gas supply will dry up any time soon. The latest Department of Energy report estimates that the U.S. has at least a 100-year supply of natural gas.

That makes it difficult for a nuclear power company to justify putting $15 billion into a new plant, and taking more than a decade to get through regulatory approvals, when the power it creates can't be sold for enough to pay back the investment, said Joe Scopelliti, spokesman for PPL's Susquehanna nuclear power plant, near Berwick.

In fact, PPL in 2008 applied to build a reactor, but Scopelliti said the company is in no rush. Approvals won't likely come before 2014, and even then PPL will have to decide when it wants to spend the $15 billion the reactor would cost to build. Theoretically, Scopelliti said, it could delay the start of the project as much as 20 years, to wait for market conditions to change.

"Nobody saw Fukushima or the changes in the economy coming, but in this business you plan 10 or 20 years ahead," Scopelliti said. "Once we get approval, we'll look at all the factors. These are massive, expensive structures. You don't start building until the conditions are right."

With conditions not currently perfect, other companies are taking a different approach. Exelon is proposing no new plants, but it is in the midst of a long-term plan to expand the capacity at its existing plants by 1,300 megawatts per hour by 2017. That's the equivalent of about one new reactor capable of providing electricity to about 1 million homes. It extends the life of Exelon plants and does it for less than half the cost of building a reactor.

The problem, however, is that even with 20-year license extensions, the 60-year life of nuclear plants means that 100 of the 104 plants nationwide will become outdated and have expired licenses by 2050, according to Tom Kauffman, a spokesman with the Nuclear Energy Institute.

Just to keep pace, the U.S. — where the last reactor came online in 1996 — would have to build more than three reactors a year. There are 28 applications to build reactors, but many of those are inactive and have been languishing for years.

However, despite all those hurdles, Kauffman sees some reasons for encouragement. In January, the Nuclear Regulatory Commission approved two new reactors in Georgia — the first two new reactors approved in the U.S. since the Three Mile Island accident.

In addition, Kauffman said, the new reactors are not only safe, but unlike the first generation, they're based on a uniform design.

Therefore, the NRC doesn't have to spend years reviewing designs because the designs to come will closely mirror the ones it just approved in Georgia. And because the facilities will be modular construction, in part built off site, construction that once took a decade can be done in half that time now. It also makes them easier to design and cheaper to build.

Two new reactors could be up and running in Georgia in six years. Kauffman believes that will breed a new confidence in the industry, prompting more communities to be more welcoming.

The 27 reactors currently under construction in China show that the U.S. can catch up fast, when the time is right.

As far as the less-than-ideal market conditions, Kauffman believes those can only improve. As the economy improves, energy use will again increase, prompting new calls for capacity in all energy areas. That will drive up prices, making nuclear more competitive.

Even bigger changes will happen if the trends toward cleaner energy continue. If more global restrictions are adopted for carbon emission, countries including the U.S. will have to emphasize cleaner energy. That could add a cost to high-emission forms of energy, such as coal, oil and gas, and drive a greater emphasis toward low-emission energy such as solar, wind and nuclear.

Nuclear is easily the most reliable of those, Kauffman said. Though expensive to build, once they're running, nuclear plants are relatively cheap to operate and they're capable of running at 90 percent capacity. So if the push for green energy becomes a regulatory shove, nuclear will be poised to take the lead, he said.

Even if that happens, even Elsberg and Scopelliti say nuclear will never dominate the energy landscape. Their hope is that it can at least maintain the 20 percent share it has now.

"Ideally, you want a national energy portfolio that includes a variety of fuels," Scopelliti said. "You definitely don't want all your eggs in one basket. But I do think that nuclear energy will always have a place in that basket."